Central Banks

Wednesday, January 11, 2012 - 22:55

Update: China Advisor: Geithner Said No Tools Left For QE3

-- Updating 21:38 ET Story With Treasury Denial

BEIJING (MNI) - A senior advisor to the Chinese government said he was told by Treasury Secretary Timothy Geithner this week that the Federal Reserve doesn't have "tools or ammunition" left for another round of quantitative easing.

Li Yang, vice-director of the Chinese Academy of Social Sciences, said he was told by the Treasury Secretary on Wednesday that recent coordinated action by global central banks amounted to some form of QE3.

A Treasury spokesperson said in response to Li's claims that "the Secretary doesn't comment on monetary policy. He made no such statement."

Li did not reveal where he was talking with Geithner during the Treasury Secretary's two-day trip to China but said he asked what the next round of quantitative easing may look like.

He said Geithner replied: "First, I am head of the Treasury Department and not in charge of the Federal Reserve, but I can make some comments," Li told a forum here Thursday.

Geithner "said they don't have tools or ammunition left. Then I asked if the currency swaps and liquidity injections by six central banks recently is some form of QE3?"

"Geithner said, 'You could say that.'"

Li appeared to be referring to November 30 coordinated action by the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank to lower the price of dollar swap arrangements by 50 basis points.

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